When the towering blue-tinted JW Marriott opened eight years ago, it was positioned to dominate both the city's skyline and convention business.

The hotel has become a familiar sight when TV cameras at sporting events scan the horizon as well as a go-to booking space for conventioners. But now, IndyStar has learned, its owner is quietly leading an effort to stop a rivaling upscale glass-lined Hilton tower from joining it on the skyline.

It’s the first significant resistance to emerge for Senate Bill 7, intricate legislation being negotiated between Indianapolis and state officials. The bill would create ways to pay for a proposed 25-year lease extension for the Indiana Pacers, a $150 million soccer stadium and a $120 million expansion of the Indiana Convention Center.

The deal hinges, at this stage, on taxes generated by a proposed 38-floor, 800-room Hilton Signia tower and an adjacent 600-room sister hotel on Pan Am Plaza.

Bruce White, the billionaire owner of Merrillville-based White Lodging, is leading an effort by Indianapolis hoteliers to halt the Hilton project because it would be a direct competitor to his JW Marriott, two political insiders close to the discussions told IndyStar.

White's representatives acknowledged he's a key player but push back on the idea he's leading the charge or overly concerned about his own business interests.

Dave Sibley, the regional vice president of White Lodging, said there won't be enough customers to fill all of those rooms in the Hiltons. He thinks that will put downward pressure on room rates throughout the city, potentially forcing hoteliers to lay off staff and put off renovations.

"It’s not just the JW Marriott," he said. "We have to expand the market in a way everyone can prosper and grow."

White and other industry leaders have met with Mayor Joe Hogsett and key lawmakers to try to halt the Hilton project. They've also commissioned a study that contradicts Visit Indy's findings that the city can absorb the Hilton hotel rooms, clouding the issue.

A rendering of the new Signia Hilton hotel planned for Downtown Indy.(Photo: Hilton photo)

House Ways and Means Chairman Todd Huston will hold a hearing for the bill Wednesday and he expects hoteliers to voice concerns. As to what he thinks, he indicated he's keeping an open mind. It's likely negotiations on the bill will continue to the final days of the legislative session ending April. 29.

While key lawmakers are taking a reserved approach, Hogsett is signaling he wants to see the Hilton project continue.

“From the city’s perspective, we are going to move full-speed ahead with our existing proposal,” said Thomas Cook, his chief of staff.

Cook said it's clear to him from data provided by Visit Indy that the tourism business can support the new and existing hotels.

"The city doesn't want the JW to fail," he said. "The JW failing would be a city project failing. The idea we would do something to kill the best convention asset we have is just not logical."

Opposition emerges

City officials and lawmakers said they had heard rumblings of discontent from hoteliers behind the scenes, even as legislation sailed smoothly through the Senate 48-1 with no significant public opposition.

That changed last week. White met March 4 with Hogsett in City Hall to try to stop the Hilton project. He was joined by Jim Dora, who owns several local hotels including the Crowne Plaza at Union Station, and Patrick Tamm, head of the Indiana Restaurant and Lodging Association, a lobbying group.

White then visited the Statehouse, IndyStar learned, though it's unclear with whom specifically he met.

White was not available for comment, but Sibley, who manages the company's Indianapolis hotels, agreed to talk to IndyStar.

Sibley said it might appear White has an oversized role in the opposition because he lives in Indiana and is willing to talk to his contacts and knock on doors on behalf of all hotel owners. Dora and Mike Wells, a hotel developer and investor who has partnered with White Lodging, have also been heavily involved, hoteliers say.

"I've worked for Bruce for 19 years," Sibley said, "and for the first time in 19 years, he's saying (a hotel project) doesn't make sense. That tells me something."

The opposition exploded into public view Wednesday when Hirons, a public relations and marketing firm, circulated a letter and a study in opposition to the Hilton hotels. White Lodging hired Hirons on behalf of the hoteliers, according to the firm.

The letter was signed by 10 prominent Downtown hoteliers, including White, Dora and Wells.

Tamm delivered the materials to House Speaker Brian Bosma and other key legislative leaders, according to Hirons. The lobbying organization, through its Greater Indianapolis Hotel Lodging Chapter, also paid to run the letter in the The Indianapolis Star and the Indianapolis Business Journal over the weekend, according to Hirons.

The letter says the hotel owners oppose Senate Bill 7 because of its link to the Hiltons and says the hoteliers want a seat at the table for future negotiations about additional hotel and convention space.

It points out the taxes from all of the Downtown hotels fund the CIB and calls the deal to attract the Hilton hotels a "scheme" no less than three times.

"It's like giving the CIB money to buy a sledgehammer so they can hit us over the head with it," the letter states.

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Pacers, Convention Center deals hinge on Hilton tax revenue

If the Hilton project is stopped, Cook said it's possible the entire deal to extend the Pacers and fund the Convention Center would unravel.

That's because those two projects rely on millions of dollars in annual taxes the Hiltons would generate.

Under the terms being discussed, the city would use property taxes from the two hotels to fund a $120 million expansion of the Indiana Convention Center.

The expansion would feature a 50,000-square foot ballroom and 30,000 square feet of meeting space, all connected via a Capital Avenue tunnel to the main Convention Center.

The state would include the Hilton hotels into a special taxing district that would generate up to $7 million annually to fund the Capital Improvement Board. A separate taxing district would fund another $8 million annually, each district using a mix of income, sales, hotel and auto rental taxes.

The CIB would then sign a lease extension with the Pacers at Bankers Life Fieldhouse and keep the remainder to fund its other assets, which include Lucas Oil Stadium, Victory Field and the Convention Center.

Cook said it's uncertain how the city and state would pay for the Pacers deal or the Convention Center without the Hilton hotels.

The hoteliers say they don't want to stop the Pacers extension. They hope to find options outside the current proposal.

"We don’t want to be a problem," Sibley said. "We want to figure out how to keep the Pacers and how to keep Downtown more vibrant. We just think we should be asked to come to the table and find the best solutions to do that."

Dueling studies

The hoteliers and Visit Indy each commissioned a study that shows a different impact from building the Hiltons.

Visit Indy hired HVS, an industry research firm that has conducted more than 6,000 convention center hotel-expansion studies, which showed the need for more convention and hotel space.

Chris Gahl, Visit Indy's senior vice president, said the CIB held a meeting that included prominent local hoteliers in January 2018 to discuss the idea of adding convention center space and a hotel with 800 or more rooms. He said they didn't hear significant push back from hotel owners.

That changed after October. That's when Hilton proposed building not just the 800-room tower, but also a 600-room hotel on Pam Am Plaza, in conjunction with Kite Realty.

Gahl said Visit Indy went back to HVS to inquire whether the city could support the additional rooms in the project.

The firm concluded occupancy citywide would decline from 72 percent today to 65 percent in 2023 after the Hiltons and other hotels in the pipeline open. Occupancy is predicted to rebound to 72 percent by 2026, the study said.

Industry leaders consider 70 percent a healthy occupancy.

The study concluded Indianapolis would retain $287.7 million in annual conventions that otherwise might slip away and put the city back in play for more than 200 groups that want more meeting space or hotel rooms, according to Visit Indy.

Gen Con and FFA already have announced they would stay in Indy for the long-term given the expansion. Gahl said tourism officials also hope to keep the NFL Combine, currently booked through 2020, in Indy due to the expansion.

Gahl said he's confident Visit Indy's research is on point and the market can support the Hilton hotels.

"It would be counter productive for us to want to overdevelop Indianapolis," he said.

The hoteliers commissioned their own study that shows different results. New York-based LW Hospitality Advisers concluded citywide occupancy would drop to 64 percent by 2025. That's the final year contemplated in the study, so it's unclear from that data when or whether a rebound would occur.

The hoteliers also doubt whether the ballroom would be the catalyst Visit Indy expects. Sibley said the city would need to add up to 141,000 square feet of conventional meeting space to handle the number of rooms proposed by Hilton.

Hoteliers say the most startling statistic is one of simple math — a fact not contradicted by either survey. If every hotel in the pipeline is built, supply would increase 38 percent by 2025.

Wells, who co owns the Indianapolis Marriott with White Lodging, said the amount of hotel rooms coming online is unprecedented.

"We are concerned about the long term," he said. "We have a really good convention business here. People think 'OK, we'll add another hotel and that will be successful,' but the study shows that's not the case."

Dora, the president and owner of General Hotels, said he's worried every hotel will suffer. Dora owns a slice of Pan Am Plaza that will not be developed as part of the Hilton deal.

"We want a seat at the table to say what's appropriate and best for the market and the overall goals of the city," he said. "We’ve always been team players in the past no matter the size of the hotels."

Hilton, at least, is unconcerned. It's betting the future of a new type of hotel on Indy. The Signia is a new brand being launched in three cities: Indianapolis, Orlando and Atlanta.

"Although the city welcomes more than 700 conventions and major events a year, independent assessments and Hilton's own detailed feasibility work tells us that Indianapolis can attract meetings and events of a completely different scale," President and CEO Chris Nassetta emailed IndyStar in response to questions for this story. "We are confident that the Signia Hilton Indianapolis will bring new business to the city and enhance its growing reputation as a premier convention destination.”

Competing bookends

If the Hilton project is built, it would be a competing bookend to the JW Marriott, with each joined to opposite ends of the Convention Center.

Visit Indy envisions a scenario where that allows multiple conventions to be booked simultaneously. Picture one convention anchored at the The JW Marriott on the west side of the Convention Center and another anchored at the Hilton on the east side of the Convention Center.

White Lodging, via the JW Marriott and other Downtown hotels in which it holds an interest, currently dominates that landscape.

The company controls 2,276 of the 4,752 hotel rooms connected via the city's extensive network of tunnels to the Convention Center, including the 1,005 at the JW Marriott.

The JW Marriott has uniquely gleamed on the skyline since opening in 2011 as part of Indianapolis's effort to lure Super Bowl XLVI, an event that also coincided with the last major expansion of the Convention Center.

The JW Marriott in downtown Indianapolis will celebrate the 101st running of the Indianapolis 500 with a logo and message on the facade of the building.(Photo: Courtesy of JW Marriott)

Dean White, who died in 2016 at age 93, considered the hotel to be his legacy for the city. Indy and tourism officials credited him with guiding the $450 million project to completion when other investors bailed and it appeared at risk of failing during the recession. His foundation then gifted Visit Indy $5.4 million near the project's completion to market the hotel and convention center expansion.

Taxpayers also funded their share. The city floated roughly $60 million in bonds to pay for a parking structure and tunnels to connect to the Convention Center in exchange for a profit-sharing provision that has yet to bear results. The city will receive 25 percent of cash flow once White Lodging achieves a certain investment return.

Hilton hotels meeting space

Hilton wouldn't have to build any of its own meeting space under the terms first disclosed — another sticking point with hoteliers.

White built 105,000 square feet of meeting space at the JW Marriott, by comparison. While it's sometimes used in conjunction with convention center events, it's White Lodging's privately-owned space to book.

The Hilton hotels, though, will have access to the 80,000-square feet of new convention space, rather than having to pay to build their own.

That comes with benefits and risks.

Under the terms, the Hilton hotels can book the space when it's not in use by publicly booked conventions. Visit Indy says conventions are booked years in advance so it's uncertain how fruitful that benefit would be for Hilton, especially on prime days.

Without their own meeting space, Sibley worries the Hiltons will have trouble booking guests and will have to lower room rates below market value to attract customers, an action that would send ripples through the entire market.

He said 70 percent of group bookings at the JW Marriott are for the hotel's own meeting space.

Sibley argues it's actually the smaller hotels dotting Downtown with limited meeting space that would struggle to book guests most under that scenario. The JW Marriott, he said, would be positioned to weather a downturn because it can market its own meeting space to customers.

"What I would tell you is we are better positioned because of our meeting space to fend off that than the whole market," he said. "But we do believe when you are putting this size in, and are not giving them the (meeting space) to be successful, that yes it will hurt us and everybody in the long term."

When asked Friday by IndyStar to respond to Sibley's concerns about the lack of convention space, Gahl said each Hilton hotel will build meeting space of its own, though it's unclear how much. He said that point is being negotiated between Kite Reality, Hilton and the CIB.

When subsequently told by IndyStar the Hiltons would have their own meeting space, Sibley was surprised. He said that such lack of transparency is what prompted hoteliers to grow concerned and conduct their own study in the first place.

"It seems like everything is adjusting on the fly as facts continue to come out," he said. "So that's why I think everyone wants to take a deep breath and bring the hotel owners into the conversation and let's try to figure out the best way to resolve all of the issues of the city together."

Visit Indy, CIB and Indy officials insist there's room for everyone.

“Hilton believes they can make money building 1,400 rooms,” said Cook, the mayor's chief of staff. “Clearly some of their natural competitors, Marriott being the biggest competitor to Hilton nationally, may think they won’t be able to make as much money when those hotels open.”

One thing seems certain: Wednesday's meeting will mark the beginning of what looks like an intense negotiation.